Changing expectations for bonuses, considerations about Groupon campaigns, tips for a showcase redo, and more.
[h3]ESCAPING THE BONUS TRAP[/h3]
[dropcap cap=Q.][h4][b] I paid an annual bonus even during the recession, but I’d really like to change things so my employees no longer think it’s part of their guaranteed salary. How can I do that without upsetting people?[/b][/h4][/dropcap]
[dropcap cap=A.] It’s probably too late this year — and your staff may well get angry and demotivated if you drop your bombshell in the crucial last quarter. That doesn’t mean it’s not a good time to unveil a new system, such as paying all bonuses quarterly, so your staff get a better sense of your financial peaks and valleys. This will also help them understand their bonuses are and should be based on your store’s financial performance, and that there’s a potential upside if you have a great year. With that new appreciation, they should be geared up for a good holiday period and be looking forward to working hard in 2012.[/dropcap]
[componentheading]MARKETING [/componentheading]
[h4][b]I’m looking to add a little excitement to my advertising and am thinking of trying a Groupon campaign. Is it a good fit for a jewelry store?[/b][/h4]
With all the media attention the service has received we can understand your excitement. Sites like Groupon, LivingSocial, Eversave and BuyWithMe offer opportunities for price discrimination, exposure to new customers, online marketing and “buzz.” Groupon itself seems eager for businesses to view its service as a marketing expense. That’s probably because most businesses report mixed results in terms of profit when they use it. A recent Rice University survey found that only 56 percent of businesses made money on their promotion, with just one in five reporting that Groupon customers returned to make a full-price purchase. Retail consultant Bob Phibbs, who has written a book titled Groupon: You Can’t Afford It — Why Deep Discounts are Bad for Business, thinks if you look at deal sites based on repeat business, profit per customer and lifetime value of the customer they are not worth it. “The reality is that these customers don’t return to those stores. Instead, they look for the next bargain,” he says. Like traditional coupons, these e-vouchers work best for merchants with low marginal costs who can accommodate a large discount. Typically that’s not a retail jeweler.
[componentheading]REMODELING[/componentheading]
[h4][b]I am going to redo my showcases for this upcoming season. How do I ensure I don’t waste my limited remodel funds?[/b][/h4]
Put the job up for bid. Contact several display firms and challenge them to accomplish your display goals within your budget. “Quality firms are usually happy to help. But ask them what they suggest, don’t just tell them you want to order some trays,” advises Larry Johnson, VP of Pacific Northern and author of The Complete Guide to Effective Jewelry Display. “Take advantage of their expertise,” he says.
[componentheading] COMPETITION[/componentheading]
[h4][b]A branch of one of the big chains is opening up in my neighborhood. How do I set myself apart in terms of the merchandise we offer (as we don’t do custom)?[/b][/h4]
You wouldn’t know it by the way most of the chains performed over the last few years but one of the things they do well is stay on top of their best-sellers. The flip side of this, and the reason they have such boring inventories, is that their merchandise tends to be locked in at the sub-$1,495 range. This doesn’t mean you should abandon the low end (consider beads your air bag), but you likely need to add some big pieces and some brand power. The recession hollowed out the inventories of many jewelers and recent sales data suggest it’s the high end that is bouncing back fastest. But if you don’t have big diamonds and other big-ticket items to show, you can’t sell them.
[span class=note]This story is from the September 2011 edition of INSTORE[/span]